Levi Strauss & Co. stated Thursday that customers are stocking up on denims in new sizes and types within the U.S. and China as they emerge fro
Levi Strauss & Co. stated Thursday that customers are stocking up on denims in new sizes and types within the U.S. and China as they emerge from their houses throughout the pandemic.
The momentum each in shops and on-line boosted its fiscal second-quarter earnings and income forward of analysts’ expectations. Though gross sales had been nonetheless down 3% from 2019, the retailer anticipates fiscal third-quarter gross sales are on monitor to high pre-pandemic ranges. That was one thing Levi beforehand did not anticipate to realize till the fourth quarter.
Levi’s inventory jumped round 3% in prolonged buying and selling on the information.
Whereas Levi raised its income and revenue outlook for the remainder of the 12 months, the corporate cautioned it assumes the Covid pandemic would not worsen around the globe.
“There are quite a lot of issues which can be exterior of our management, just like the pandemic … and the Delta variant, and what is going on to occur subsequent,” stated Chief Government Chip Bergh in a telephone interview. “However the group has demonstrated quite a lot of agility and with the ability to reply.”
Here is what the corporate reported for the quarter ended Could 30 in contrast with what Wall Road was anticipating, based mostly on a survey of analysts by Refinitiv:
- Earnings per share: 23 cents adjusted vs. 9 cents anticipated
- Income: $1.28 billion vs. $1.21 billion anticipated
Levi stated it swung to a revenue of $65 million, or 16 cents per share, from a web lack of $364 million, or 91 cents per share, a 12 months earlier. Excluding one-time changes, Levi earned 23 cents per share, topping analysts’ estimates for 9 cents.
Levi’s income surged 156% to $1.28 billion from $498 million a 12 months earlier. That beat expectations for $1.21 billion.
Gross sales within the U.S. and China surpassed 2019 ranges, however had been nonetheless down on a two-year foundation in Europe attributable to ongoing retailer closures associated to the well being disaster. Roughly a 3rd of Levi’s European shops, and 17% of its international places, had been closed throughout the interval.
The corporate stated 92% of its shops are reopened in the meanwhile.
Worth will increase, financial savings on sourcing supplies and decrease promotional exercise helped increase earnings. It recorded record-high revenue margins. Levi stated it has already adjusted most of its product prices by the primary half of 2022 to account for very low single-digit inflation.
A brand new denim cycle is what’s serving to to drive gross sales momentum. In latest months, tight-fitting pants have been trending out of favor, and as a substitute customers are flocking to looser-hanging, wide-leg and flared denims. Many customers really feel the necessity to completely refresh their wardrobes. Levi can be seeing progress in its tops enterprise.
“We’re seeing good proof of the brand new denim cycle pushed by the looser and baggier suits, which we have led, and that offers us quite a lot of optimism in regards to the second half of this 12 months,” Bergh informed CNBC.
Baggier suits of denims made up roughly 50% of Levi’s gross sales for ladies and men throughout the newest quarter. About 35% of U.S. customers have modified waist sizes, up and down, throughout the pandemic, Bergh stated.
Levi additionally stated it has been working to strengthen its wholesale operations by investing in relationships with key companions, comparable to Nordstrom, and getting out of shops which can be synonymous with markdowns. Wholesale income within the newest interval rose 167% from a 12 months earlier.
And the corporate remains to be rising its digital enterprise, with international e-commerce gross sales up 75% 12 months over 12 months, representing about 23% of complete gross sales.
For fiscal 2021, Levi expects earnings of between $1.29 and $1.33 per share after changes. Analysts had been searching for earnings of $1.15 per share.
For the second half of the 12 months, Levi expects gross sales to rise 28% to 29% in contrast with a 12 months earlier, and be up 4% to five% in contrast with 2019. The corporate did not present particular estimates for all the 12 months, however stated gross sales must be near 2019 ranges. Analysts have been searching for full-year gross sales progress of 24.6% from 2020.
“Revenues in most markets are recovering quicker than anticipated, and we’re rising from the pandemic with sustainable and improved structural economics,” Chief Monetary Officer Harmit Singh stated in a information launch.
Levi raised its dividend by 2 cents per share to eight cents for the third quarter.
Levi’s inventory has rallied practically 40% 12 months up to now. The corporate’s market cap is roughly $11.2 billion.
Discover the total earnings press launch from Levi’s right here.